EX-10.35: FORM OF 2006 NON-QUALIFIED STOCK OPTION AWARD AGREEMENT

EX-10.35 3 y20747exv10w35.txt EX-10.35: FORM OF 2006 NON-QUALIFIED STOCK OPTION AWARD AGREEMENT Exhibit 10.35 FORM OF 2006 BAND B EMPLOYEE & SG22-23 OPTION AGREEMENT ITT INDUSTRIES, INC. 2003 EQUITY INCENTIVE PLAN NON-QUALIFIED STOCK OPTION AWARD AGREEMENT THIS AGREEMENT (the "Agreement"), effective as of the _____ day of ___________, by and between ITT Industries, Inc. (the "Company") and [name] (the "Optionee"), WITNESSETH: WHEREAS, the Optionee is now employed by the Company or an Affiliate (as defined in the Company's 2003 Equity Incentive Plan, as amended and restated as of July 13, 2004 (the "Plan")) as an employee, and in recognition of the Optionee's valued services, the Company, through the Compensation and Personnel Committee of its Board of Directors (the "Committee"), desires to provide an opportunity for the Optionee to acquire or enlarge stock ownership in the Company, pursuant to the provisions of the Plan. NOW, THEREFORE, in consideration of the terms and conditions set forth in this Agreement and the provisions of the Plan, a copy of which is attached hereto and incorporated herein as part of this Agreement, and any administrative rules and regulations related to the Plan as may be adopted by the Committee, the parties hereto hereby agree as follows: 1. Grant of Options. In accordance with, and subject to, the terms and conditions of the Plan and this Agreement, the Company hereby confirms the grant on _____________ (the "Grant Date") to the Optionee of the option to purchase from the Company all or any part of an aggregate of ___________shares of common stock of the Company (the "Option"), at the purchase price of $_____ per share (the "Option Price" or "Exercise Price"). The Option shall be a Nonqualified Stock Option. 2. Terms and Conditions. It is understood and agreed that the Option is subject to the following terms and conditions: (a) Expiration Date. The Option shall expire on (seven years from the grant date), or, if the Optionee's employment terminates before that date, on the date specified in subsection (e) below. (b) Exercise of Option. The Option may not be exercised until it has become vested. (c) Vesting. Subject to subsections 2(a) and 2(e), the Option shall vest in three installments as follows: (i) 1/3 of the Option shall vest on (first anniversary of the grant date), (ii) 1/3 of the Option shall vest on (second anniversary of the grant date), and (iii) 1/3 of the Option shall vest on (third anniversary of the grant date); Subject to subsections 2(a) and 2(e), to the extent not earlier vested pursuant to paragraphs (i), (ii), and (iii) of this subsection (c), the Option shall vest in full upon an Acceleration Event (as defined in the Plan). (d) Payment of Exercise Price and Tax Withholding. Permissible methods for payment of the Exercise Price and for satisfaction of tax withholding obligations upon exercise of the Option shall be as described in Section 6.6 and Article 14 of the Plan, or, if the Plan is amended, successor provisions. In addition to the methods of exercise permitted by Section 6.6 of the Plan, the Optionee may exercise the Option by way of a broker-assisted cashless exercise in a manner consistent with the Federal Reserve Board's Regulation T, unless the Committee determines that such exercise method is prohibited by law. (e) Effect of Termination of Employment. If the Optionee's employment terminates before (seven years from the grant date), the Option shall expire on the date set forth below, as applicable: (i) Termination due to Death. If the Optionee's employment is terminated as a result of the Optionee's death, the Option shall expire on the earlier of (seven years from the grant date) or the date three years after the termination of the Optionee's employment due to death. If all or any portion of the Option is not vested at the time of the Optionee's termination of employment, the Option shall immediately become 100% vested. (ii) Termination due to Disability. If the Optionee's employment is terminated as a result of the Optionee's Disability (as defined below), the Option shall expire on the earlier of (seven years from the grant date) or the date five years after the termination of the Optionee's employment due to Disability. If all or any portion of the Option is not vested at the time of the termination of the Optionee's employment, the Option shall immediately become 100% vested. (iii) Termination due to Retirement. If the Optionee's employment is terminated as a result of the Optionee's Retirement (as defined below), the Option shall expire on the earlier of (seven years from the grant date) or the date five years after the termination of the Optionee's employment due to Retirement. If all or any portion of the Option is not vested at the time of the Optionee's termination of employment, a prorated portion of the unvested portion of the Option shall immediately vest as of the date of the termination of employment (see "Prorated Vesting Upon Retirement" below). Any remaining unvested portion of the Option shall expire as of the date of the termination of the Optionee's employment. For purposes of this subsection 2(e)(iii), the Optionee shall be considered employed during any period in which the Optionee is receiving severance in the form of salary continuation, and the date of the termination of the Optionee's employment shall be the last day of any such severance period. (iv) Voluntary Termination; Cause. If the Optionee's employment is terminated by the Optionee for any reason other than Retirement, Disability or death, or by the Company (or an Affiliate, as the case may be) for cause (as determined by the Committee), the vested and unvested portions of the Option shall expire on the date of the termination of the Optionee's employment. (v) Other Termination by the Company. If the Optionee's employment is terminated by the Company (or an Affiliate, as the case may be) for other than cause (as determined by the Committee), and not because of the Optionee's Retirement, Disability or death, the vested portion of the Option shall expire on the earlier of (seven years from the grant date) or the date three months after the termination of the Optionee's employment. Any portion of the Option that is not vested (or the entire Option, if no part was vested) as of the date the Optionee's employment terminates shall expire immediately on the date of termination of employment, and such unvested portion of the Option (the entire Option, if no portion was vested on the date of termination) shall not thereafter be exercisable. For purposes of this subsection 2(e)(v), the Optionee shall be considered employed during any period in which the Optionee is receiving severance in the form of salary continuation, and the date of the termination of the Optionee's employment shall be the last day of any such severance period. Notwithstanding the foregoing, if an Optionee's employment is terminated on or after an Acceleration Event (A) by the Company (or an Affiliate, as the case may be) for other than cause (as determined by the Committee), and not because of the Optionee's Retirement, Disability, or death, or (B) by the Optionee because the Optionee in good faith believed that as a result of such Acceleration Event he or she was unable effectively to discharge his or her present duties or the duties of the position the Optionee occupied just prior to the occurrence of such Acceleration Event, the Option shall in no event expire before the earlier of the date that is 7 months after the Acceleration Event or (seven years from the grant date). Retirement. For purposes of this Agreement, the term "Retirement" shall mean the termination of the Optionee's employment if, at the time of such termination, the Optionee is eligible to commence receipt of retirement benefits under a traditional formula defined benefit pension plan maintained by the Company or an Affiliate (or would be eligible to receive such benefits if he or she were a participant in such traditional formula defined benefit pension plan). Disability. For purposes of this Agreement, the term "Disability" shall mean the complete and permanent inability of the Optionee to perform all of his or her duties under the terms of his or her employment, as determined by the Committee upon the basis of such evidence, including independent medical reports and data, as the Committee deems appropriate or necessary. Prorated Vesting Upon Retirement. The prorated portion of an Option that vests upon termination of the Optionee's employment due to the Optionee's Retirement shall be determined by multiplying the total number of unvested shares subject to the Option at the time of the termination of the Optionee's employment by a fraction, the numerator of which is the number of full months the Optionee has been continually employed since the Grant Date and the denominator of which is 36. For this purpose, full months of employment shall be based on monthly anniversaries of the Grant Date, not calendar months. (f) Compliance with Laws and Regulations. The Option shall not be exercised at any time when its exercise or the delivery of shares hereunder would be in violation of any law, rule, or regulation that the Company may find to be valid and applicable. (g) Optionee Bound by Plan and Rules. The Optionee hereby acknowledges receipt of a copy of the Plan and this Agreement and agrees to be bound by the terms and provisions thereof. The Optionee agrees to be bound by any rules and regulations for administering the Plan as may be adopted by the Committee during the life of the Option. Terms used herein and not otherwise defined shall be as defined in the Plan. (h) Governing Law. This Agreement is issued, and the Option evidenced hereby is granted, in White Plains, New York, and shall be governed and construed in accordance with the laws of the State of New York, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction. By signing a copy of this Agreement, the Optionee acknowledges that s/he has received a copy of the Plan, and that s/he has read and understands the Plan and this Agreement and agrees to the terms and conditions thereof. The Optionee further acknowledges that the Option awarded pursuant to this Agreement must be exercised prior to its expiration as set forth herein, that it is the Optionee's responsibility to exercise the Option within such time period, and that the Company has no further responsibility to notify the Optionee of the expiration of the exercise period of the Option. IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its Chairman, President and Chief Executive Officer, or a Vice President, as of the ___ day of ___________. Agreed to: ITT Industries, Inc. _____________________________ /s/ Steven R. Loranger Optionee Dated: _________________ Dated: Enclosures